Impasse Intensifies: US Debt Ceiling Negotiations At Critical Juncture, As Biden Hold Talks With McCarthy

• President Joe Biden and Republican leader Kevin McCarthy have engaged in talks over the US debt ceiling.

• Negotiations are ongoing between Democrats and Republicans, with both sides remaining far apart in their demands. 

• The situation has rattled financial markets, with a deal still proving elusive.

EKO HOT BLOG reports that President Joe Biden and Republican leader Kevin McCarthy have engaged in talks over the US debt ceiling, which has been a contentious issue between the two parties.

Failure to reach an agreement by June could have serious consequences for the country, including defaulting on its debt and causing chaos in financial markets.

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Mr Biden recently returned from the G7 summit in Japan, where he spoke of the need for Republicans to accept that there is no bipartisan deal to be made solely on their terms. While he stated that proposals put forward by the Republicans were “quite frankly, unacceptable,” he also expressed a willingness to cut spending to reach a compromise.

Meanwhile, Mr McCarthy described his call with Mr Biden as “productive”, although both sides remain far apart.

In exchange for supporting raising the debt ceiling, Republicans are demanding budget cuts of $4.5tn, which includes eliminating some of Mr Biden’s legislative priorities while also seeking increased spending on military and border security.

The White House has called the Republican proposal “a blueprint to devastate hard-working American families.”

The negotiating teams met at Mr McCarthy’s office on Capitol Hill, and discussions will continue overnight.

Treasury Secretary Janet Yellen has emphasized that 1 June remains a “hard deadline.” If a deal is not reached by this date, the US risks suspending social insurance payments and the salaries of federal and military employees.

Default could also cause havoc in the global economy, affecting prices and mortgage rates in other countries.

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The situation has rattled financial markets, with the Dow, S&P 500, and Nasdaq all dipping in response.

With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proven elusive. Both President Biden and Mr McCarthy face pressure from their respective party factions to hold the line.

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